NEW YORK - Stocks fell sharply Wednesday after Federal Reserve Chairman Ben Bernanke confirmed investors' fears that the economy has weakened. Interest rates dropped in the Treasury market as investors sought safer places for their money.

Bernanke told a congressional committee that the economy is "unusually uncertain." He said the economy is fragile, but he did not forecast that it would fall back into recession.

The Dow Jones industrial average, which was modestly higher before Bernanke's prepared remarks, fell 109 points as investors absorbed his assessment of the economy, and his statement that the Fed is ready to take action if the economy worsens.

Bernanke's comments, part of his semiannual report to Congress, weren't surprising given the disappointing economic reports and corporate earnings numbers released in recent weeks. But they were enough to upset investors who've grown increasingly nervous about the state of the recovery. Some investors may have been hoping for a more upbeat reading from the Fed chairman.

The Fed is still expecting the economy to expand this year, but the central bank has lowered its forecast for growth.

Oliver Pursche, executive vice president at Gary Goldberg Financial Services, said investors took Bernanke's comments as "not exactly a 'rah-rah USA' type of endorsement."

The Dow fell 109.43, or 1.1 percent, to 10,120.53. The broader Standard & Poor's 500 index fell 13.89, or 1.3 percent, to 1,069.59. The Nasdaq composite index lost 35.16, or 1.6 percent, and fell to 2,187.33.

Craig Peckham, market strategist at Jefferies & Co., said stocks fell not because of anything Bernanke said, but what he didn't say about any plans to stimulate the economy. Although Bernanke said the Fed was "prepared to take further policy actions as needed," he also said, "we are not prepared to take any specific steps in the near term" because the Fed is still evaluating the economy.

Peckham said, "The market expected that we'd see more sign of monetary easing in the testimony. But that didn't happen." Monetary easing would include steps to make credit more available or encourage banks to lend more.